In order to ensure that the leverage ratio of the portfolio does not deviate too much from the agreed ratio, leveraged ETFs have their own special rebalancing mechanism. BigONE has innovated the timing rebalancing mechanism of traditional ETF products.
There are two types of rebalancing mechanisms for BigONE innovative ETF products:
1. BigONE's innovative timing conditional rebalancing changes the traditional ETF's daily mandatory rebalancing principle at 0:00.
Timed conditional rebalancing will be selectively triggered at 0:00 every day according to specific conditions. If the conditions are met, the rebalancing management will be carried out. If not, it will not be carried out.
For example, if the underlying currency BTC has an increase of 1% on the day and does not meet the conditions for triggering the rebalancing mechanism, then the investor account will not be rebalanced at 0:00, and the investor's principal will not increase or decrease.
BTC’s increase on the day is 2%, which meets the conditions for triggering the rebalancing mechanism, then the investor’s account will be rebalanced at 0:00, the investor will make a profit, and the principal will increase after rebalancing; if the investor loses, the principal will be reduced after rebalancing.
2. Unscheduled rebalancing mechanism
When the fluctuation of the underlying currency exceeds the 15% threshold on the day, the irregular rebalancing mechanism will also be triggered. Irregular rebalancing is only for the party that loses due to the fluctuation range. If BTC falls by 15%, the system will automatically rebalance 3L leveraged ETF products, and other products will not be rebalanced.
It should be noted that the market continues after triggering the irregular rebalancing, and the user's loss becomes smaller; if the market reverses immediately after the triggering, the rebound of the product will be weakened due to the rebalancing.
It can be seen from this that in extreme market conditions, although ETF products will not be liquidated, it will cause a large amount of net worth wear and tear, making your assets infinitely close to zero.
The cryptocurrency market fluctuates greatly, and triple leveraged ETF products will increase price fluctuations. Please be sure to check the leveraged ETF product documentation for details and participate with caution;
BigONE does not do price endorsement or project guarantee for any project. Please consider various factors such as project popularity, market trends, and your own risk tolerance, prudently decide whether to participate in the transaction, and allocate your assets reasonably.